Which of the Following Is True Regarding Accounting for Inventories

question 101

Multiple Choice

Which of the following is true regarding accounting for inventories?

• A) GAAP permits use of either the consumption method or the purchases method
• B) If inventories are significant, GAAP requires that an asset account be credited in order to record a fund balance reserve
• C) Under the consumption method, Expenditures are debited when inventory is received
• D) All of the above are true

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Definitions:

Economic Needs

The basic requirements for an individual or family to maintain a standard of living, including food, shelter, and clothing.

Housing Needs

The requirements for shelter and accommodations that support a livable and secure environment for individuals or families.

Gradual Retirement

A process or arrangement allowing employees to reduce their working hours and workload over time before completely retiring.

Abrupt Retirement

The sudden and unexpected cessation of employment, leading to a transition from a working life to retirement without gradual adjustment.